Western Australia’s retail trade sector continues to outperform those in other states due to its strong domestic economy, according to data released by the Australian Bureau of Statistics last week.
Western Australia’s retail trade sector continues to outperform those in other states due to its strong domestic economy, according to data released by the Australian Bureau of Statistics last week.
Retail trade figures for November last year showed WA had experienced 11 consecutive months of strong growth and was the only state to record a strong trend.
Clothing and soft goods retailing led the way, experiencing strong growth during the previous 14 months, followed by recreational and other goods retailing.
In the hospitality and services sector, the strength of growth softened to ‘moderate’ in November, after 10 months of strong performance, while retailing growth in the food sector continued to be moderate.
Department stores were the main underperformer, showing weak growth for the month, although WA was the only state to report a positive trend, with all other states and territories recording a decline.
Recent data from the Department of Treasury and Finance confirm the positive climate in retailing, showing nominal retail turnover for November 2006 to be up 0.6 per cent to nearly $2 million.
New motor vehicle sales fell during the month by 0.9 per cent, to 9,535, despite WA being the only state to record a positive annual average growth (10.9 per cent), massively outperforming the rest of the nation, which posted a total average decline of 2.3 per cent.
While the monthly changes for retail turnover and motor vehicles in WA were modest, the yearly trend for both categories continued to be strong, with nominal turnover increasing by 9.2 per cent in the year to November, exceeding all states and territories and the national average of 5.6 per cent.
Nationally, retail spending was sluggish following an interest rate rise of a quarter of a per cent in November, with retail trade rising by a seasonally adjusted 0.2 per cent.
Retail Traders Association director Brian Reynolds told WA Business News that, while a further interest rate rise might affect the sector in WA, any impact was likely to be marginal because of the insulating effect of robust local conditions.
“Clearly, an interest rate rise of any size will have an impact, but we have such a strong economy here in WA that the capacity of Western Australians to cope with that interest rate is really quite significant,” Mr Reynolds said.
“Because of the strength and very high levels of consumer confidence and high levels of personal wealth, the capacity of WA to absorb any impact of a rate rise is significantly higher than any other state.”
The Reserve Bank of Australia is due to review interest rates on February 6, with some analysts speculating the bank will enact another rate rise, bringing the total number of rises to four within the past 12 months.
Following the release of labour force statistics by the ABS last week, which showed WA’s unemployment rate to be 3.1 per cent and the nation’s 4.6 per cent, economists suggested further rate rises may be on the RBA’s agenda.
Westpac senior economist Andrew Hanlan said in a release that the new figures would put pressure on the RBA to raise rates.
“For the Reserve Bank, I think this just reinforces why we saw inflation accelerating during 2006 and it will do nothing to allay their concerns about inflation risks in 2007,” he said.